Friday, 23 December 2011

Favelle Favco 7229

Instead of volume analysis, Favelle favco has been one of the largest crane producer in the world. Its subsidiary, largest hammerhead crane in the world,the Kroll K10,000 and the largest luffing tower crane in the world,the Favelle Favco M2480. 

For year ended 2010, Favco has achieved an EPS of 16.36cent wif a 5 cent dividend distribution. For this year 2011, the 3 quarters EPS has achieved 15.37cent,almost 94% of previous full year EPS. By rolling forward 5.71 EPS for the last quarter, the full year EPS would be 22.07cent in total. The projected P/E will be about 5times. It is relatively cheap. 

Besides, Favco has been maintaining a 25% to 30% dividend payout for the past few years. With the minimum projected EPS of 22.07cent, it would be a 6.5cent dividend to be declared in February 2012. Take note that it is the minimal projection as we know that there are contracts being secured for last quarter. 6.5cents dividend with 1.25 closing price as dated 23/12/2011 it is a 5% dividend yield. Indeed, it is much more better than the FD interest.

The table above showing the contracts that Favco has secured. Thus, the contributions and revenues of Favco will be stable and achieving an constant growth throughout the years.As at 16 November 2011, outstanding order book of the Group is RM609.1 million of which majority is from oil and gas cranes for the offshore oil and gas exploration and production activities. Remaining are from the shipyard, construction and wind turbine industry.

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